7 Best Cheap Stocks to Buy Now Under $5 – Money
The stock market has begun to recover from its decline in the first half of the year. As a result, there aren’t as many low-cost stocks available as there were a few months ago. Nonetheless, for those prepared to seek out the least well-known firms, there are plenty of savings to be found. As is customary, buyers should exercise extreme caution when purchasing stocks trading below $5. Firms frequently wind up there due to poor operating outcomes or having unproven or faltering business ideas. Regardless, there are companies that are worthwhile investments for less than $5. Here are seven such cheap stocks to buy right now for less than $5.
1. Vaalco Energy Inc.
Vaalco is an oil and gas exploration business based in Houston. Historically, its operations have been centered on opportunities in Africa, namely an offshore basin in Gabon. The company announced plans to merge with TransGlobe Energy Corp. in July (TGA). On a net revenue basis, the combined company will be a broad-based African oil producer with over 20,000 barrels of oil-equivalent production per day. The merger should allow the merged company to save a significant amount of money on superfluous costs while increasing its operating scale. Vaalco’s shares recently fell below $5 due to a decline in energy stocks and some speculators selling off the company on the merger news. Shares are now trading for less than three times expected forward earnings. Even with a hefty discount for oil price volatility and geopolitical risk, the stock, which closed at $4.82 on Aug. 3, appears to be too cheap.
2. Cementos Pacasmayo SAA
Cementos Pacasmayo is Peru’s largest cement firm, having an annual production capacity of 4.9 million tons. While cement may appear to be a commodity company, it has a geographic competitive moat. Because of its weight, carrying cement over long distances is prohibitively expensive. This effectively provides a company like Cementos Pacasmayo a local monopoly. As the Peruvian economy recovered from COVID-19, the company’s profits increased in 2021. The stock is now selling at roughly 12 times earnings. And earnings may continue to rise. Peru’s economy is strongly reliant on gold, silver, copper, and other commodities, all of which should thrive in an inflationary atmosphere .A stronger Peruvian economy overall and increased direct demand for cement at industrial facilities should result from this. On August 3, shares closed at $4.85.
3. Banco Bilbao Vizcaya Argentaria SA
One of Spain’s leading banking brands is Banco Bilbao Vizcaya Argentaria, or BBVA. In addition to its operations in Europe, BBVA has a major presence in markets throughout Latin America, including Colombia, Argentina, and Peru. In total, the bank runs 29,000 ATMs and more than 6,000 locations. Given its exposure to Spain, which is seen as a faltering and unappealing market, BBVA stock tends to remain permanently cheap. However, given the significantly improved commodity prices and economic outlook for several of those countries, its operations in Latin America can make up for that. The price of BBVA stock, which ended at $4.61 on August 3, is less than six times earnings, and it has a trailing-12-month dividend yield of more than 7%. This provides BBVA with a high valuation floor and significant upside potential should sentiment turn around.
4. Matterport Inc.
A recent special-purpose acquisition company, or SPAC, called Matterport rose above $30 at one point but has since dropped to under $5. At the company’s previous top, it was difficult to explain the valuation, but shares are now worth another look. Making 3D models of buildings is what Matterport does for a living. These can be used by landlords to provide virtual tours of their properties, assist in leasing or renting out spaces to tenants, advertise hotels to potential customers, and more.
In addition to upfront sales of camera equipment, Matterport also generates income through licensing and subscription sales. The transition to a subscription business model caused the company to have a difficult year, but growth has since resumed. The full-year sales projection for Matterport is about $130 million, which makes the $1.3 billion valuation seem like a fair starting point. On Aug. 3, the stock reached a low of $4.79.
5. Rigetti Computing Inc.
Like Matterport, Rigetti Computing is another SPAC whose value has fallen recently. Quantum computing is something Rigetti wants to make money off of. At this point, quantum bits are used by computers instead of conventional bits. Unlike regular computers, which scale in a linear way, quantum computing scales exponentially. According to Rigetti, this will make it possible for the scientific and research communities to advance in areas like medication discovery, computer vision, hypersonic simulation, and artificial intelligence. Due to its current low level of commercial revenue, Rigetti is a stock with a high level of risk.
However, it works closely with well-known organizations including the Defense Advanced Research Projects Agency, Lawrence Livermore National Laboratory, the U.S. Department of Energy, and the U.S. Air Force. If Rigetti is able to fulfill its initial promise, the share price, which fell from $10 to $4.31 as of August 3, could be a great starting place.
6. UWM Holdings Corp.
One of the biggest mortgage brokers in the nation is UWM. It also had a SPAC. As a result, both the decline in popularity of SPACs and the worries about the status of the property market have had a significant negative impact on shares. The volume of business is projected to decrease as a result of rising interest rates on new mortgages. There will be fewer refinancing deals in particular until interest rates level off. But sooner or later, the housing market will rebound. As of right now, UWM earned 66 cents a share in 2021, which values the stock at slightly under six times earnings from the previous year. This year, analysts expect earnings per share of 47 cents, which leaves shares trading at a scarcely excessive eight times earnings.
Given the state of the economy right now, it makes sense that investors would be wary of any business involved in the housing industry. However, as soon as sentiment begins to recover, UWM’s franchise should be worth more than $4 a share.
7. YPF SA
YPF, which has been in the oil and gas industry for almost a century, is the largest firm in Argentina by revenue. 51% of the company is owned by the Argentine government, and the remaining 49% is held by outside stockholders. YPF is an operator with total integration. It supplies a sizable amount of Argentina’s natural gas needs in addition to producing, transporting, and refining its oil production. The business has expanded into related industries as well, such as its YPF Luz renewable energy venture. YPF is benefiting from the increase in oil and gas prices that has helped the energy industry as a whole. Given Argentina’s enormous shale energy potential, it is also a unique growth play.
Since 2017, YPF has increased both its shale oil and shale gas production by 3.6 and 5.8 times, respectively. YPF currently has a strong chance to expand its shale activities due to rising energy prices and shortages of those products in other markets. On August 3, shares finished at $3.72.